US tariffs to kick in Aug 1, barring trade deals

WASHINGTON: US tariffs will kick in on Aug 1 if trading partners from Taiwan to the European Union do not strike deals with Washington, Treasury Secretary Scott Bessent said on Sunday (Jul 6). 

The rates will "boomerang back" to the sometimes very high levels which President Donald Trump had announced on Apr 2, before he suspended the levies to allow for trade talks and set a Jul 9 deadline for agreement, Bessent told CNN.

Bessent confirmed comments by Trump to reporters aboard Air Force One on Friday in which he also cited a new deadline: "Well, I'll probably start them on Aug 1."

The president told reporters Sunday he had signed 12 letters to inform countries of rate hikes, to be sent out on Monday.

"I think we'll have most countries done by Jul 9, either a letter or a deal," Trump told reporters Sunday, adding that some deals have already been made.

Standing at his side, US Commerce Secretary Howard Lutnick confirmed tariffs would kick in on Aug 1, "but the president is setting the rates and the deals right now".

The tariffs were part of a broader announcement in April where Trump imposed a 10 per cent duty on goods from almost all trading partners, with a plan to step up these rates for a select group within days.

But he swiftly paused the hikes until Jul 9, allowing for trade talks to take place.

Countries have been pushing to strike deals that would help them avoid these elevated duties.

So far, the Trump administration has unveiled deals with the United Kingdom and Vietnam, while Washington and Beijing agreed to temporarily lower staggeringly high levies on each other's products.

Bessent said the administration was "close to several deals".

"I would expect to see several big announcements over the next couple of days," he said.

But he would not say which countries he was referring to, adding: "I don't want to let them off the hook."

"MAXIMUM PRESSURE" PLAYBOOK

Aboard Air Force One on Friday, Trump said sending notices would be much easier than "sitting down and working 15 different things ... this is what you have to pay, if you want to do business (with) the United States".

Bessent pushed back at CNN host Dana Bash's assertion that the administration was using threats rather than negotiations, and denied that Trump was setting a new deadline with the Aug 1 date.

"It's not a new deadline. We are saying, this is when it's happening. If you want to speed things up, have at it. If you want to go back to the old rate, that's your choice," he said.

He said the playbook was to apply "maximum pressure" and cited the European Union as an example, saying they are "making very good progress" after a slow start.

EU and US negotiators are holding talks over the weekend, and France's finance minister said on Saturday he hoped they could strike a deal this weekend.

Other countries were still expressing unease, however.

Japan's Prime Minister Shigeru Ishiba said on Sunday he "won't easily compromise" in trade talks with Washington.

And BRICS leaders of fast-growing economies meeting in Rio de Janeiro raised "serious concerns" that the "indiscriminate" import tariffs were illegal and risked hurting global trade.

When probed about worries that steep levies could feed into broader US inflation, Bessent said there was a difference between "inflation and one-time price adjustments."

"Inflation is a generalised monetary phenomenon. We're not going to see that. And thus far, we haven't even seen the one-time price adjustments," Bessent told Fox News Sunday.

Pradeep Taneja, a senior Asian studies lecturer at the University of Melbourne, said the Trump administration's approach to global trade has been "very chaotic and very destructive". 

"It makes it very difficult for other countries, particularly countries in the Indo-Pacific region, to deal with the US... given that policies change all the time," he told CNA's Asia Now. 

"Given this uncertainty, it is a very destructive approach, and I don't see any clarity even after Aug 1."

Taneja said smaller nations have had little bargaining power against the US. 

"Their trade with the US is significant for (them) but it's not significant for the US. So, the US would be able to ... force its will on these smaller countries," he noted. 

He added that Trump's insistence on imposing tariffs on key trading partners will undermine public trust in bilateral ties with the US. 

"Trump seems to believe that tariffs are the key principle of international trade. This seems to be a key part of his economic strategy," he said.